The disappointing data has raised expectations that the ECB will cut interest rates to a historic low at a policy meeting on Thursday to prevent it from being sucked into a Japanese-style deflationary trap.

"There is a real and growing danger that the eurozone enters a Japanese-style bout of flat or falling prices. But even a prolonged period of low positive inflation would seriously hamper the peripheral countries’ efforts to restore their public finances to health," said Capital Economist economists Roger Bootle and Jonathan Loynes in a paper titled, Turning Japanese.

They said even the core economies in the currency bloc are flirting with deflation - inflation was just 0.6pc in Germany in May, 0.8pc in France in April and 0.6pcin the Netherlands, adding: "That means that the peripheral economies will need to see even deeper price falls if they are going to regain competitiveness relative to the core"

Martin van Vliet, an analyst at ING, said: "The low core inflation reading in particular should dispel any remaining hesitation within the (ECB) Governing Council to act aggressively on Thursday."

Inflation in the 18-nation eurozone has fallen steadily in the past year, reflecting weak demand, with current rates are lagging behind the ECB's target of 2pc. Economists had forecast growth in inflation of 0.6pc in May.

If the eurozone fall into deflation, it risks pushing the economy into a spiral of falling growth and rising unemployment which is difficult to reverse.

However, Capital Economics cautioned: "Even low positive inflation will make it very hard for them [peripheral eurozone nations] to restore their competitiveness in relation to the core economies and elsewhere and to bring their debts under control.

"Against that background, the risk that one or more of those countries might yet seek a different route back to economic and fiscal health – perhaps via a Greek-style debt restructuring or default, perhaps even via eventual exit from the currency union – has not yet fully evaporated. Correspondingly, the markets’ recent optimism towards the eurozone may well prove to be somewhat premature."

Analysts expect the ECB to introduce a negative deposit rate, meaning the central bank would charge lenders to hold money with it overnight. Such a measure has never been introduced by a major central bank, although Sweden and Denmark have set negative rates on reserves.

The ECB has held its key interest rates steady at their current all-time lows since November, repeatedly promising to act if necessary to avert a bout of destructive deflation in the 18 countries that share the euro.

ECB president Mario Draghi has hinted at the possibility of such a move, saying the central bank's decision-making governing council was "dissatisfied" with the current path of inflation and was "not prepared to accept it as a fact of nature."

Eurozone growth stands at 0.2pc and on Monday the European Commission warned that while “growth has returned” to Europe “the recovery is fragile”.

The inflation figures were released alongside eurozone jobs figues showing the unemployment fell to 11.7pc in April, with notable signs of improvement in Portugal and Ireland.

About 18.75m people remained unemployed in the eurozone in April, down 76,000 from the March level and 487,000 from a year earlier, the Eurostat statistics agency said.

The unemployment rate among youths, a huge concern in Europe's crisis-hit countries, also dipped by 0.1 point over the month to 23.5 percent in April. Over 12 months, the number of youths without work has fallen by 202,000.